Course Introduction
Managerial Accounting Chapter
Exam Questions
Managerial Accounting is a course designed to equip students with essential knowledge and skills for internal business decision-making. The course covers the collection, analysis, and interpretation of financial data to aid managers in planning, controlling, and evaluating operations. Topics include budgeting, cost behavior, variance analysis, performance measurement, and responsibility accounting. Emphasis is placed on the application of accounting information in strategic planning and operational efficiency, enabling future managers to make informed, data-driven decisions that align with organizational objectives.
Recommended Textbook
Cost Accounting A Managerial Emphasis 14th Edition by Charles T. Horngren
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Page 2
Chapter 1: The Accountants Role in the Organization
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Sample Questions
Q1) Processing orders and shipping products or services to customers (also called outbound logistics)is also known as
A)customer focus
B)distribution
C)marketing
D)supply chain
Answer: B
Q2) The supply chain always occurs within a single organization.
A)True
B)False
Answer: False
Q3) Strategic cost management describes cost management that specifically focuses on strategic issues.
A)True
B)False
Answer: True
Q4) Explain how a customer focus can result in increased profits for a company.
Answer: If customers who provide a company with the most profits are attracted, satisfied, and retained, profits will increase as a result.
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Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) Manufacturing sector firms normally hold three types of inventory: direct materials inventory, work-in-process inventory, and finished goods inventory.
A)True
B)False
Answer: True
Q2) Merchandising companies normally report:
A)only merchandise inventory
B)only finished goods inventory
C)direct materials inventory, work-in-process inventory, and finished goods inventory accounts
D)no inventory accounts
Answer: A
Q3) A customer could be considered a cost object.
A)True
B)False
Answer: True
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Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) If the sales mix shifts to one unit of Product X and two units of Product Y, then the weighted-average contribution margin will:
A)increase per unit
B)stay the same
C)decrease per unit
D)be indeterminable
Answer: A
Q2) Which option should Patrick choose to maximize income assuming there is a 40% probability that 70 units will be sold and a 60% probability that 40 units will be sold?
A)Option 1
B)Option 2
C)Option 3
D)All options maximize income equally.
Answer: C
Q3) A revenue driver is defined as a variable that causes changes in prices.
A)True
B)False
Answer: False
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Chapter 4: Job Costing
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Sample Questions
Q1) In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.
A)direct materials
B)direct labor
C)manufacturing overhead costs
D)total costs
Q2) Give three examples of costs that can be considered indirect for a product and direct for a department.
Q3) In a normal costing system, the Manufacturing Overhead Control account:
A)is increased by allocated manufacturing overhead
B)is credited with amounts transferred to Work-in-Process
C)is decreased by allocated manufacturing overhead
D)is debited with actual overhead costs
Q4) How much should the client be billed in an actual costing system if 200 professional labor-hours are used?
A)$5,000
B)$6,960
C)$7,480
D)$6,400
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Chapter 5: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) ABC systems:
A)highlight the different levels of activities
B)limit cost drivers to units of output
C)allocate costs based on the overall level of activity
D)generally undercost complex products
Q2) The primary costs of an ABC system are the measurements necessary to implement the system.
A)True
B)False
Q3) To set realistic selling prices:
A)all costs should be allocated to products
B)costs should only be allocated when there is a strong cause-and-effect relationship
C)only unit-level costs and batch-level costs should be allocated
D)only unit-level costs should be allocated
Q4) How much of the total cost will be assigned to the Plowing Department?
A)$396,000
B)$202.200
C)$134,600
D)$172,000
Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) Line managers who feel that top management does NOT believe in the budget are most likely to:
A)pick up the slack and participate in the budgeting process
B)be motivated by the budget
C)spend little time on the budgeting process
D)convert the budget to a shorter more reasonable time period
Q2) Which budget is NOT necessary to prepare the budgeted balance sheet?
A)cash budget
B)budgeted statement of cash flows
C)budgeted income statement
D)revenues budget
Q3) What is the expected Accounts Payable balance as of May 31?
A)$11,792
B)$24,912
C)$36,704
D)$2,948
Q4) Each manager, regardless of level, is in charge of a responsibility center.
A)True
B)False
Q5) Describe the concept of kaizen budgeting.
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Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
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Sample Questions
Q1) If budgets contain slack, cost variances will tend to be favorable.
A)True
B)False
Q2) An unfavorable variance indicates that:
A)actual costs are less than budgeted costs
B)actual revenues exceed budgeted revenues
C)the actual amount decreased operating income relative to the budgeted amount
D)All of these answers are correct.
Q3) One of the primary reasons for using cost variances is:
A)they diagnose the cause of a problem and what should be done to correct it
B)for superiors to communicate expectations to lower-level employees
C)to administer appropriate disciplinary action
D)for financial control of operating activities and understanding why variances arise
Q4) A particular variance generally signals one particular problem.
A)True
B)False
Q5) Decreasing demand for a product may create a favorable sales-volume variance.
A)True
B)False
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Chapter
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Sample Questions
Q1) An unfavorable variable overhead efficiency variance indicates that the company used more than planned of the cost-allocation base.
A)True
B)False
Q2) Managers should use unitized fixed manufacturing overhead costs for planning and control.
A)True
B)False
Q3) When machine-hours are used as an overhead cost-allocation base, the most likely cause of a favorable variable overhead spending variance is:
A)excessive machine breakdowns
B)the production scheduler efficiently scheduled jobs
C)a decline in the cost of energy
D)strengthened demand for the product
Q4) Fixed overhead costs must be unitized for:
A)financial reporting purposes
B)planning purposes
C)calculating the production-volume variance
D)Both A and C are correct.
Chapter 9: Inventory Costing and Capacity Analysis
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Sample Questions
Q1) What is the inventoriable cost per unit using variable costing?
A)$32
B)$35
C)$40
D)$60
Q2) Using normal capacity for pricing decisions can lead to setting noncompetitive selling prices.
A)True
B)False
Q3) ________ method(s)is required for tax reporting purposes.
A)Variable costing
B)Absorption costing
C)Throughput costing
D)All of these answers are correct.
Q4) Managers face uncertainty when estimating:
A)demand of the product
B)the denominator level for practical capacity
C)total fixed manufacturing costs for the next accounting period
D)All of these answers are correct.
Q5) Discuss the three methods to dispose of production volume variance.
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Chapter 10: Determining How Costs Behave
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Sample Questions
Q1) A linear cost function can represent:
A)mixed cost behaviors
B)fixed cost behaviors
C)variable cost behaviors
D)All of these answers are correct.
Q2) What is the estimate of total labor costs at Alice Company when 10,000 labor-hours are used?
A)$17,000
B)$41,000
C)$21,167
D)$27,000
Q3) y = a + bX represents the general form of the linear cost function. which is expressed in Excel as y=mx+b.
A)True
B)False
Q4) Which cost estimation method is being used by Christopher Company?
A)the quantitative analysis method
B)the industrial engineering method
C)the conference method
D)the account analysis method
Page 12
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Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) Relevant costs are expected future costs that differ among alternatives.
A)True
B)False
Q2) The cost to produce Part A was $20 per unit in 2013 and in 2014 it has increased to $22 per unit. In 2014, Supplier ABC has offered to supply Part A for $18 per unit. For the make-or-buy decision:
A)incremental revenues are $4 per unit
B)incremental costs are $2 per unit
C)net relevant costs are $2 per unit
D)differential costs are $4 per unit
Q3) How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.
Q4) The sum of all the costs incurred in a particular business function (for example, marketing)is called the:
A)business function cost
B)full product cost
C)gross product cost
D)multiproduct cost
Q5) Explain what revenues and costs are relevant when choosing among alternatives.
Page 13
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Chapter 12: Pricing Decisions and Cost Management
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Sample Questions
Q1) A price-bidding decision for a one-time-only special order includes an analysis of all:
A)manufacturing costs
B)cost drivers related to the product
C)direct and indirect variable costs of each function in the value chain
D)fixed manufacturing costs
Q2) A hotel in Orlando, Florida, experiences peak periods and slower times. How should prices be adjusted during peak periods? During slow times? Why?
Q3) Life-cycle budgeting estimates the costs and revenues attributed to a product from its initial R&D through production of a prototype product.
A)True
B)False
Q4) Long-run pricing decisions:
A)have a time horizon of less than one year
B)include adjusting product mix in a competitive environment
C)and short-run pricing decisions generally have the same relevant costs
D)use prices that include a reasonable return on investment
Q5) What is the primary reason a firm would adopt target costing?
Q6) What factors may influence the level of markups?
Page 14
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Chapter 13: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
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Sample Questions
Q1) Conversion costs are an example of ________.
A)direct engineered costs
B)indirect engineered costs
C)discretionary costs
D)unused capacity costs
Q2) What is the direct manufacturing labor partial productivity, assuming 20,000 units were produced during 2011 and 80,000 direct manufacturing labor-hours were used?
A)0.25 unit per direct manufacturing labor-hour
B)0.50 unit per direct manufacturing labor-hour
C)0.75 unit per direct manufacturing labor-hour
D)1.00 unit per direct manufacturing labor-hour
Q3) ________ measures the relationship between actual inputs used and actual outputs achieved.
A)Total factor productivity
B)Partial productivity
C)Productivity
D)Product yield variance
Q4) What are the four key perspectives in the balanced scorecard?
Q5) What is the primary purpose of the balanced scorecard?
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Chapter 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
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Sample Questions
Q1) When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees, the best criteria are:
A)the cause-and-effect and the ability-to bear criteria
B)the cause-and-effect and the benefits-received criteria
C)the benefits-received and the fairness criteria
D)the fairness and the ability-to-bear criteria
Q2) What amount of interest costs should be allocated to the Electric Mixer Division?
A)$225,000
B)$525,000
C)$2,100,000
D)$7,000,000
Q3) Dropping an unprofitable customer will:
A)eliminate long-run costs assigned to that customer
B)eliminate most short-run costs assigned to that customer
C)decrease long-run profitability
D)increase the potential to cross-sell other products that are more desirable
Q4) A customer cost hierarchy may include customer-sustaining costs.
A)True
B)False
Page 16
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Chapter 15: Allocation of Support-Department Costs,
Common Costs, and Revenues
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Sample Questions
Q1) The reciprocal allocation method:
A)is the most widely used because of its simplicity
B)requires the ranking of support departments in the order that the allocation is to proceed
C)is conceptually the most precise
D)results in allocating more support costs to operating departments than actually incurred
Q2) Give examples of bundled products for each of the following industries:
a. Resort hotel
b. Bank
c. Restaurant
d. Computer store
e. Gasoline service station/convenience store
f. Software manufacturer
Q3) ________ occurs where revenues, related but NOT traceable to individual products, are assigned to those individual products.
A)Revenue tracing
B)Revenue allocation
C)Stand-alone pricing
D)Reciprocal pricing
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Chapter 16: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) The net realizable value method:
A)allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
B)allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
C)allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
D)allocates joint costs to joint products on the basis of relative NRV
Q2) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?
A)$28.58
B)$100.00
C)$870.00
D)$1,500.00
Q3) A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.
A)True
B)False
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Chapter 17: Process Costing
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Sample Questions
Q1) Under standard costing the cost per equivalent-unit calculation is more difficult than in either weighted average or FIFO.
A)True
B)False
Q2) What is the unit cost per equivalent unit of beginning inventory in Department A?
A)$2,000
B)$3,500
C)$7,000
D)$7,500
Q3) What amount of direct materials costs are assigned to the ending Work-in-Process account for April?
A)$248,387.10
B)$250,000.00
C)$143,750.00
D)$145,312.50
Q4) Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?
Q5) List and describe the five steps in process costing.
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Chapter 18: Spoilage, Rework, and Scrap
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Sample Questions
Q1) Under the weighted-average method, the costs of normal spoilage are added to the costs of their related good units. Hence, the cost per good unit completed and transferred out equals the total costs transferred out divided by the number of good units produced.
A)True
B)False
Q2) Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as:
A)scrap
B)reworked units
C)abnormal spoilage
D)normal spoilage
Q3) Costs of abnormal spoilage are separately accounted for as losses of the period.
A)True
B)False
Q4) What is the number of total spoiled units?
A) 16,000 units
B) 10,000 units
C) 50,000 units
D)14,000 units
Page 20
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Chapter 19: Balanced Scorecard: Quality, Time, and the
Theory of Constraints
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Sample Questions
Q1) A tool which indicates how frequently each type of defect occurs is a:
A)control chart
B)Pareto diagram
C)cause-and-effect diagram
D)fishbone diagrams
Q2) A tool which identifies potential causes of failures or defects is a:
A)control chart
B)Pareto diagram
C)cause-and-effect diagram
D)None of these answers is correct.
Q3) Two common operational measures of time are customer-response time and manufacturing lead time.
A)True
B)False
Q4) In the banking industry, depositing a customer's check into the wrong bank account is an example of quality of design failure.
A)True
B)False
Page 21
Q5) Discuss the methods used to identify quality problems.
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Chapter 20: Inventory Management, Just-In-Time, and Simplified Costing Methods
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Sample Questions
Q1) The costs that result when features and characteristics of a product or service are NOT in conformance with the specifications are:
A)inspection costs
B)costs of quality
C)purchasing costs
D)design costs
Q2) What are the relevant total costs?
A)$5,697
B)$2,829
C)$8,029
D)$2,868
Q3) Video Boy has one particular product that has an annual demand of 2,000 units.
Total manufacturing costs per unit total $20. Ordering costs for the product total $25 per purchase order. Currently, the carrying costs per unit are 25% of manufacturing costs. Required:
Determine the economic manufacturing order quantity.
Q4) A trigger point refers to the inventory level at which a reorder is generated.
A)True
B)False
22
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Chapter 21: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) The stage of the capital budgeting process that considers the expected costs and the expected benefits of alternative capital investments is the:
A)identify projects stage
B)make decisions by choosing among alternatives stage
C)obtain information stage
D)make predictions stage
Q2) In capital budgeting, a project is accepted only if the internal rate of return equals or:
A)exceeds the required rate of return
B)is less than the required rate of return
C)exceeds the net present value
D)exceeds the accrual accounting rate of return
Q3) What conflicts can arise between using discounted cash flow methods for capital budgeting decisions and accrual accounting for performance evaluation? How can these conflicts be reduced?
Q4) The payback method is only useful when the expected cash flows in the later years of the project are highly uncertain.
A)True
B)False
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Chapter 22: Management Control Systems, Transfer
Pricing, and Multinational
Considerations
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Sample Questions
Q1) Assume 200 barrels are transferred from the Production Division to the Refining Division for a transfer price of $18 per barrel. The Refining Division sells the 200 barrels at a price of $120 each to customers. What is the operating income of both divisions together?
A)$7,200
B)$7,800
C)$10,800
D)$20,400
Q2) The transfer-pricing method that reduces the goal-congruence problems associated with a pure cost-plus-based transfer-pricing method is:
A)dual pricing
B)market pricing
C)single pricing
D)Both A and B are correct.
Q3) Opportunity costs represent the cash flows directly associated with the production and transfer of the products and services.
A)True
B)False
Q4) Briefly explain each of the three methods used to determine a transfer price.
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Chapter 23: Performance Measurement, Compensation, and Multinational Considerations
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Q1) Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. Springfield's after-tax cost of debt is:
A).0320
B).0480
C).0800
D).0912
Q2) The "four levers" of control are diagnostic control systems, boundary systems, belief systems, and interactive control systems.
A)True
B)False
Q3) The after-tax average cost of all the long-term funds used by a corporation equals:
A)economic value added
B)return on investment
C)return on equity
D)weighted-average cost of capital
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